Bankers’ bonus cap faces axe

A CAP on bankers’ bonuses could be scrapped after Brexit, Mark Carney said last night.

The burden of other EU rules, such as red tape on insurers and tough guidelines for small banks and building societies ,may also be relaxed to boost the City, the Bank of England Governor suggested.

In a move that will be cheered by finance chiefs, Mr Carney – who has been criticised for his gloom about Britain’s future outside the European Union – outlined opportunities to make improvements after Brexit.

Asked if there were any rules he thought could be changed, he said: ‘There are things we don’t think are necessary. There are areas where we would make changes, but within the context of maintaining the overall levels of resilience.’

The cap on bankers’ bonuses, put in place after the financial crisis, has long been a bugbear of the Square Mile.

Brussels rules mean that bonuses are limited to the same as a banker’s basic salary, or double that with special approval from shareholders.

The cap was introduced in 2014, but faced a legal challenge from Britain before the Government bowed to pressure and introduced it.

The Bank of England has long opposed the restrictions, arguing they drive up basic pay. Scrapping the rules would allow institutions to woo bankers from across the EU as London fights to keep its spot as Europe’s top financial hub.

Mr Carney also suggested that the financial services industry will continue to grow after the UK leaves the EU.

Many smaller lenders and building societies say Brussels rules force them to hold back money which could otherwise be used to support businesses.

And insurers have repeatedly complained they have set aside billions unnecessarily.

‘We think in general there should be more proportionate regulation,’ Mr Carney said. But he added that the Bank was determined to avoid Britain becoming a ‘ Singapore- onSea’ low-regulation state.

Any changes would not amount to a ‘race to the bottom’, he pledged.

Mr Carney was speaking at an event to mark the second anniversary of the FICC Market Standards Board (FMSB), a regulatory group set up after the Libor rate-rigging scandal.